MBL Infra
MBL Infrastructures is entering the capital market on 27th November, 09 with a public issue of 57 lakh equity shares of Rs.10 each, in the price band of Rs.165-Rs.180 per share.
The company is into construction of roads and highways and can be considered as a mid size contractor in the sector. For FY09, the total income of the company was at Rs. 514 crores and after excluding income of waste management and trading activities, of Rs.149 crores, income from core business is placed at Rs.365 crores. PAT for the year has been placed at Rs.23.20 crores, on an equity base of Rs.11.81 crores. Margins of the company are comparable with other peers in the sector, with the same size. For June 09 quarter, total income of the company was at Rs.151 crores, of which, income from core business was at Rs.113 crores, with PAT at Rs.8.60 crores. Post IPO, paid up equity of the company will rise from Rs.11.81 crores to Rs.17.51 crores.
The company intends to mobilize between Rs.94 crores to Rs.102 crores from the proposed IPO. The company intends to use Rs.55 crores for capital equipments and Rs.30 crores for working capital requirements. The debt of the company, as at 30.6.09, was at Rs.201 crores, on a net worth of Rs.107 crores, resulting in a debt equity ratio of close to 1.90 times. This has been thus putting an interest burden of close to Rs.32 crores, on an annualized basis.
The company can very well be compared with KNR Constructions, which is now ruling at Rs.119. This company, for FY09, had a total income of Rs.654 crores, with PAT at Rs.43.66 crores, resulting in an EPS of Rs.15.55, on an equity base of Rs.28.12 crores. This translates into a market capitalization of Rs.335 crores. On top of it, the company is less leveraged, as evident from its interest burden of Rs.11.16 crores, for the year. Total debt of the company looks to be below Rs.85 crores. This burden is reducing further, as it is only at Rs.3.41 crores, for 6 months ending Sept.09. During 6 months ending Sept.09, the total income of the company was at Rs.252 crores, with PAT at Rs.19.50 crores, resulting in an EPS of Rs.6.93, for the period. FY10 is likely to post an EPS of Rs.16 plus, which results in a PE multiple of 7.50 times.
As against this, the company is expected to have an EPS of Rs.22 for FY10, which results in a PE of over 8 times, at the upper band. Even the market cap of Rs.315 crores and EV of Rs.500 crore plus, at the upper band, looks quite stretched. So, if shares are issued at Rs.165, at its lower band, it gives some room to make money on listing. But at the upper band of Rs.180, it looks fully priced, or even slightly overpriced, with no scope being seen to make money on listing. Better plays in the secondary market are available.